Coalition approves media law shake-up

Dominic White with Max Mason

The Turnbull government has defied media moguls Rupert Murdoch and Kerry Stokes in scrapping Keating-era media ownership laws but denying News Corp's pay television venture Foxtel more access to sports rights and delaying a possible TV licence fee cut until the May budget.

Communications Minister Mitch Fifield announced what he called the "most significant media reform in Australian media in a generation", scrapping two key laws in a move that could unleash a wave of mergers and would allow News Corp to buy Channel Ten or Fairfax Media to merge with Nine Entertainment.

Communications Minister Mitch Fifield has proposed amendments to abolish both the reach rule and the two-out-of-three rule. Photo: Jesse Marlow

The changes will abolish the reach rule, which prevents mergers between regional television networks and their metropolitan affiliates, and the two-out-of-three rule, which stops any proprietor from owning a newspaper, radio station and television network in the same major market.

Extra local content obligations will be imposed on regional television networks if they are acquired by or merged with another company and there are new incentives to shoot local footage.

But the anti-siphoning list of sports quarantined for free-to-air television is unchanged.

News Corp, which attacked the plans when cabinet approved them last week, struck a more diplomatic tone on Tuesday, with a spokesman saying: "The legislation is a step towards media reform, but as the Minister made clear it is crucial the two elements of the package must stay together if consumers and companies are to genuinely benefit."

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But Richard Freudenstein, the chief executive of Foxtel, which News owns with Telstra, said: "Yet again we see piecemeal change benefiting one section of the industry but nothing to reduce the regulatory burden on the growing subscription sector which injects billions into the economy and employs thousands of Australians."

Senator Fifield, who has left the door open to a reduction to the list in future, told a press conference in Canberra: "If there was to be meaningful change (to the list) in the future I think it would need to enjoy the broad support of the Parliament."

Nine sitting prettier

Mr Stokes' Seven West Media, which analysts say will do worse than rival Nine from the changes, dismissed the Bill pointedly for failing to "address the 4.5 per cent gross revenue licence fee that is crippling our ability to invest in local news, live sport, drama and other programming".

"Media ownership changes might be great for the deal junkies out there but they are not going to ensure a strong future for Australian film and television production," said Seven chief executive Tim Worner said.

"You won't see one more minute of local content as a result of these changes, in fact you will probably see a lot less, especially in regional Australia. It's disappointing that the Government has not walked the talk when it says it wants to focus on innovation and the future.

"These changes tinker with rules put in place by the Howard Government 10 years ago. They do nothing to improve competitiveness or offer better services."

Asked if he was concerned about a possible backlash, including from the Murdoch press, Senator Fifield said the decision on what reforms to propose had been taken in the public interest. "My discussions with all media organisations have been cordial and professional and we've made sure they have good input and are not surprised by the outcome," he said.

Greg Hywood, chief executive of Fairfax Media, owner of The Australian Financial Review, The Sydney Morning Herald and The Age, welcomed the package, saying: "We believe the removal of these restrictions will provide substantial benefits to all Australians by strengthening local media. It also sets the platform for further media law reform in the future."

Labor worried about power of News

The Bill will be lodged with the House of Representatives on Wednesday and will be referred by the Government to a Senate committee, increasing the chances that it may not pass before an election if the Government calls an early poll.

Labor has signalled it is willing to repeal the reach rule but has yet to back abolition of the two-out-three rule amid some fears such a move could hand more power to News Corp.

Shadow Communications Minister Jason Clare said: "We accept and understand that the digital world has changed our media landscape but maintaining the diversity of our media is important.

"Labor will consider the evidence presented to this committee and determine our position on the bill through normal Shadow Cabinet and Caucus processes."

In order to guarantee the bill's passage, the Coalition will need the support of six of the eight Senate cross benchers if the Greens and the ALP block it.

Senator Fifield said he "would not dare" to speak for the cross bench but that they "have an open mind and recognise the media laws we have are being rendered redundant".

Regional television networks, which have led the campaign for the changes, were unanimous in their support

"The Minister's reform package will enable regional media businesses to achieve the necessary scale to determine their own future and start to reduce their dependency on others," said Ian Audsley, chief executive of Prime Media.

Senator Fifield announced that extra local content obligations will be imposed on regional television networks if they are acquired by or merged with another company, rising from 720 to 900 "points" of local content over a six week period. The changes would come in six months after the merger "trigger event".

Points of content

At the same time regional networks' operations in areas not currently captured by the local content regime will be require to produce local content, at a lower level of 320 points, if their ownership changes.

Networks will continue to earn one point for each minute of local content in a licence area, and two points for new content relevant to a local area, but will also earn three points for material that includes local footage from the area.

Senator Fifield told a press conference in Canberra this was "intended to serve as an incentive for broadcasters to have a presence that's local", such as employing cameramen and journalists.

WIN Corp chief executive Lancaster said: "The new local content obligations strike a sensible balance between ensuring reasonable levels of local content are maintained upon the merger of a regional and metro broadcaster, while ensuring local news services remain financially viable in the meantime."

Ten Network chief executive Paul Anderson called Mr Fifield proposed changes an important first step in helping Australian media companies compete in a globalised market. "Ten Network is now competing directly for viewers and advertisers against large, global internet companies that are exempt from local media regulation, don't pay television licence fees, pay minimal corporate tax despite taking billions in advertising revenue in this market, and in some cases don't have a single local employee," Mr Anderson said.

"Meanwhile, we pay the highest broadcasting tax in the world on top of our normal corporate taxes and we are held back by media ownership rules that don't even recognise the existence of the internet."

"Addressing television licence fees and updating media laws are essential if we want to see a vibrant, diverse and competitive Australian media industry going forward. These changes are critical and urgent if we want to retain local voices in our media and a local content production industry," Mr Anderson said.

Nine chief executive Hugh Marks, who has said licence fee cuts are his priority, said Mr Fifield's announcement on Tuesday was only the start of necessary reforms. "The central issue is how do we create a level playing field that enables us to compete effectively into the future with the global brands that have entered the market, and continue to provide Australian audiences with the very best free to air television service. This needs to be done in a way that stimulates Australian content and Australian jobs."